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Essays on Behavior Under Risk and Uncertainty

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Essays on Behavior Under Risk and Uncertainty Essays on Behavior under Risk and Uncertainty Inaugural-Dissertation zur Erlangung des Doktorgrades der Wirtschafts- und Sozialwissenschaftlichen Fakultät der Universität zu Köln 2012 vorgelegt von Dipl.-Vw. Julia Stauf aus Siegburg Referent: Prof. Dr. Axel Ockenfels Korreferent: Prof. Dr. Bernd Irlenbusch Tag der Promotion: 21. Januar 2013 Acknowledgements The writing of this dissertation has been one of the greatest intellectual and personal challenges I have faced. It would not have been completed without the support, motivation and guidance of the following persons. First and foremost, I thank my supervisor Axel Ockenfels for giving me the opportunity to work in an excellent academic environment and for guiding my research. His ideas, his knowledge and his commitment to the highest methodological standards inspired and challenged me and deepened my understanding of science. I thank my second supervisor Bernd Irlenbusch for his valuable comments and for reviewing my thesis. I thank my co-authors Gary Bolton, Christoph Feldhaus, Diemo Urbig and Utz Weitzel for fruitful discussions and for close collaboration in our joint research projects. I thank my present and former colleagues Sabrina Böwe, Olivier Bos, Felix Ebeling, Christoph Feldhaus, Vitali Gretschko, Lyuba Ilieva, Jos Jansen, Sebastian Lotz, Johannes Mans, Alex Rajko, Diemo Urbig and Peter Werner for the great working atmosphere, for countless discussions of academic, general and personal matters, and for making research fun. Beyond this, I thank Vitali and Alex for repeated corrections of my beliefs about my success probability. I thank our student helpers and in particular Markus Baumann, Andrea Fix, Gregor Schmitz and Johannes Wahlig for providing excellent research assistance. I thank Thorsten Chmura, Sebastian Goerg and Johannes Kaiser for sharing their knowledge with me during the time I spent with them at the Bonn Laboratory for Experimental Economics, and especially for encouraging me to pursue a doctoral degree. I thank Martin Offer for conducting an experiment on me during my diploma studies by incentivizing the hours I spent in the library. His results were highly significant both in terms of my interest in the field and my grades. Finally, I thank my sisters Viola and Leonie Stauf, my brother Patrick Stauf, my mother Hildegard Hass-Stötzel and my father Franz-Josef Stauf for their support, patience and confidence. i Table of contents 1 Introduction ............................................................................................................................................. 1 2 What is your level of overconfidence? A strictly incentive compatible measurement method ................................................................................................................................................................. 5 2.1 Introduction ...................................................................................................................................................... 5 2.2 Overconfidence measurements and potential improvements ..................................................... 7 2.2.1 Incentive compatibility ....................................................................................................................... 7 2.2.2 Precision and comparability of confidence measurements ............................................. 10 2.3 Characteristics of the proposed method ............................................................................................ 10 2.3.1 Experimental design ......................................................................................................................... 12 2.3.2 Measurements ..................................................................................................................................... 14 2.3.3 Formal proof of strict incentive compatibility ....................................................................... 15 2.4 Results .............................................................................................................................................................. 19 2.4.1 Simultaneous over- and underconfidence at the population level ................................ 20 2.4.2 Confidence in absolute versus relative performance .......................................................... 21 2.5 Conclusions .................................................................................................................................................... 23 2.6 Appendix ......................................................................................................................................................... 25 3 Risk taking in a social context ......................................................................................................... 34 3.1 Introduction ................................................................................................................................................... 34 3.2 Main experiments ........................................................................................................................................ 35 3.2.1 Experimental design ......................................................................................................................... 35 3.2.2 Procedure .............................................................................................................................................. 38 3.2.3 Results .................................................................................................................................................... 38 3.3 Additional tests ............................................................................................................................................. 42 3.3.1 Experimental design ......................................................................................................................... 42 3.3.2 Procedure .............................................................................................................................................. 43 3.3.3 Results .................................................................................................................................................... 43 3.4 Conclusion ...................................................................................................................................................... 47 3.5 Appendix ......................................................................................................................................................... 48 4 A hero game ........................................................................................................................................... 56 4.1 Introduction ................................................................................................................................................... 56 4.2 The hero game .............................................................................................................................................. 57 4.2.1 Version 1 (a b) ................................................................................................................................ 58 4.2.2 Version 2 (a b) ................................................................................................................................ 59 4.3 Experiment ..................................................................................................................................................... 62 ii 4.3.1 Design ..................................................................................................................................................... 62 4.3.2 Procedure .............................................................................................................................................. 64 4.4 Hypotheses ..................................................................................................................................................... 65 4.5 Results .............................................................................................................................................................. 66 4.5.1 Treatment 1 .......................................................................................................................................... 66 4.5.2 Treatment 2 .......................................................................................................................................... 67 4.5.3 Treatment comparison .................................................................................................................... 69 4.6 Discussion ....................................................................................................................................................... 69 4.7 Conclusion ...................................................................................................................................................... 74 4.8 Appendix ......................................................................................................................................................... 75 5 Speak up, hero! The impact of pre-play communication on volunteering ..................... 78 5.1 Introduction ................................................................................................................................................... 78 5.2 Theory .............................................................................................................................................................
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